Hyperliquid Policy Center, Phantom Ask CFTC to Clarify Onchain Software Rules
The two organizations submitted their position as part of a broader industry response to recent CFTC rulemaking activity.
The Hyperliquid Policy Center and Phantom wallet have called on the Commodity Futures Trading Commission to clarify how its rules apply to the publication of onchain protocol software, a question with significant implications for decentralized infrastructure builders across the crypto industry.
The two organizations submitted their position as part of a broader industry response to recent CFTC rulemaking activity. Their core argument centers on a specific regulatory gap: whether developers and wallet operators who publish or distribute software that interacts with onchain markets should be treated as regulated intermediaries under existing CFTC frameworks, according to the Hyperliquid Policy Center’s blog post outlining the request. For related coverage, see Paribu adds Hyperliquid and Polymarket in Turkiye.
KEY POINTS
- Who: The Hyperliquid Policy Center and Phantom wallet are jointly urging CFTC action.
- What: They want clear rules distinguishing software publication from brokerage or intermediary activity.
- Why it matters: Without clarity, developers building onchain market infrastructure face uncertain legal exposure.
The distinction matters because publishing open-source protocol software is fundamentally different from operating a brokerage. The Hyperliquid Policy Center and Phantom are asking the CFTC to formally recognize that difference, ensuring that code publishers are not inadvertently swept into regulatory categories designed for traditional financial intermediaries. For related coverage, see ICIJ Reports Circle Faces Wisconsin Criminal Complaint Over Scam Victim Funds.
Phantom’s involvement signals that the issue extends well beyond any single protocol. As one of the most widely used self-custody wallets in crypto, Phantom operates frontend software that connects users to decentralized protocols. The question of whether such wallet interfaces constitute regulated activity is directly relevant to its business, and to the broader ecosystem of wallet providers and frontend operators.
Why clearer software publication rules matter for onchain protocols
The CFTC has been actively refining its approach to digital asset markets. A recent CFTC press release addressed how the agency distinguishes between wallet software and broker-dealer functions, a line that has direct bearing on how protocol developers and wallet makers structure their products.
For builders, the current ambiguity creates a chilling effect. Teams developing onchain trading protocols or decentralized exchange infrastructure must decide whether their software publication activity could trigger registration requirements. Without explicit guidance, some projects may limit U.S. availability or restructure operations preemptively, potentially pushing innovation offshore.
What this means for wallet and frontend operators
For wallet operators like Phantom and frontend developers, the stakes are equally concrete. If publishing software that routes transactions to onchain protocols is classified as intermediary activity, every wallet provider and decentralized application frontend could face compliance obligations currently designed for centralized brokers.
Hyperliquid, which has seen growing institutional interest, with Framework Ventures listing it among its major crypto positions, and Bitwise recently adding HYPE to its 10 Crypto Index ETF, has a clear interest in ensuring that the regulatory environment supports onchain market infrastructure rather than inadvertently restricting it.
The request also arrives amid broader regulatory developments in the U.S. crypto space, where political leaders have emphasized the importance of the U.S. maintaining its competitive position in digital asset innovation.
What to watch next
The CFTC has not yet issued a formal response to the Hyperliquid Policy Center and Phantom’s request. Any guidance the agency produces on the software publication question could set a precedent for how all onchain protocol developers and wallet operators are regulated going forward.
Industry participants will be watching for whether the CFTC draws a clear line between passive software distribution and active intermediation, a distinction that could shape the legal architecture of decentralized finance in the United States for years to come.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
